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Russia-Ukraine war: Vladimir Putin’s comings and goings with gas raise tension in Europe

Some incredible twists and turns by President Vladimir Putin about paying in euros and dollars or only in rubles from European countries for their gas purchases, created an even more alarming climate this Thursday about the development of the crisis as a result of the invasion of Russia to Ukraine.

More than a week ago, Putin announced that the European countries that pay one billion euros a day for supplies of Russian methane should pay Gazprom, the state gas company, in rubles and no longer in euros and dollars, as established in the contracts.

Otherwise, Russia would close the gas pipelines as of this Friday, April 1. The measure would cause serious damage. Germany depends 53% on Russian gas and more than 30% on oil. Italy imports 45% of its methane needs through gas pipelines that come from Russia.

On Wednesday, Putin spoke with Italian Prime Minister Mario Draghi, who informed him that for the Europeans this imposition was “not only unacceptable but impossible.”

Draghi recounted the dialogue at a press conference he held this Thursday with foreign correspondents in Italy.

He said that Putin informed him that “the existing contracts are still in force” and that it was a concession only for them, the European companies.

Russia expects “hostile” countries to pay in rubles for the gas they buy from it. Photo: REUTERS

“I understood that the issue of currency conversion was an internal problem of the Russian Federation,” Draghi said.

Shortly after the words of the Italian premier came the unexpected announcement in Moscow by President Putin, dedicated to the so-called “hostile” countries, which are those that support the invaded Ukraine and that include the 27 countries of the European Union.

Everyone “must open ruble accounts in Russian banks.” “Payments for the gas that will be delivered from tomorrow, April 1, will be made from those accounts,” the Kremlin leader said in a televised speech.

Without that condition, “existing contracts will be suspended,” Putin added. He recalled that the measure is a response to the blockade of 300 billion foreign exchange reserves that Russia has abroad, decided by Western countries in retaliation for the Russian invasion of Ukraine.

  The European gas pipeline network

reactions

The announcement sent Western leaders jumping out of their seats. The one who bounced the highest was the head of the German government, Olaf Scholz, who like Draghi also spoke on Wednesday by phone with Putin.

One of the Prime Minister’s collaborators, Steffen Hebestreit, referred after the telephone dialogue that Scholz raised with the Russian president that he was unacceptable claiming that German gas and oil supply contracts be paid in rubles, when it was agreed and signed that they be in euros and dollars.

Putin replied that for the European partners of these contracts “nothing will happen”. The same thing he had said to the Italian Draghi.

The Russian president told Scholz and Draghi that Russia decided to charge for its gas in rubles because of the economic sanctions applied after the so-called Special Military Operations began on February 24, as Russia officially qualifies its war of invasion of Ukraine. But the measure, he added, does not include European countries.

The head of the German government, Olaf Scholz, said that his country will continue to pay for Russian gas in euros.  Photo: EFE

The head of the German government, Olaf Scholz, said that his country will continue to pay for Russian gas in euros. Photo: EFE

precautions

Germany and France announced that they are “preparing” for the Russian gas cut, after a meeting in Berlin of the ministers of Economy, Robert Habeck and Bruno Lemaire.

In Thursday’s announcement, Putin gave the impression a resounding reverse regarding what he reported to the prime ministers of Germany and Italy. He didn’t say there were exceptions.

Between a confusion full of grudges between the Europeans and Russia, came a Kremlin decree that settled a situation of great instability. It establishes that “hostile countries” can continue to pay for natural gas in foreign currency through a Russian bank, which in turn will convert it to rubles.

Importers of methane and oil deposit their payments mostly with Gazprombank, the bank of Russian state-owned gas giant Gazprom.

They already have the accounts in the Russian bank. In fact, everything remains the same: if the Russians want to convert euros or dollars into euros, they are masters of doing so. In addition, the dollars and euros also remain in Russian hands, as until now.

The surprised German head of government declared that his country will now “carefully study what the ideas are,” referring to Putin. “In any case, what counts for companies is that they want to and will be able to pay in euros,” he clarified.

Italian Prime Minister Mario Draghi confirmed that Putin assured him that Europe would not be obliged to pay for gas in rubles and that existing contracts remain in force. “European companies will pay in euros and dollars,” he said.

Rome, correspondent

CB

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